John:
It wasn't just a computer problem.
People were having problems reading printed reports. According to the D&RGW documentation, the problem was not really with MOW equipment with three characters in the designation (like 042 071, etc.), it was with five or six character designations such as: 044455. Often there would be a non-MOW car numbered 44455 and the system was confusing the two.
According to D&RGW letters dated in June and August of 1967, the adoption of the X was to avoid the confusion.
The AX designation was instituted in August of 1962 at the direction of W. J. Holtman.
The instructions read "Cars with "AX" stenciling will be cars that were previoulsy designated as "X" cars from which all restrictions as far as train handling is concerned have been cleared by virtue of car department inspection and restencling." In other words, cars lettered AX could be placed anywhere in the train.
As far as I know, the only narrow gauge cars ever lettered AX were cars used in the construction of the dam at Arboles in 62.
Jerry Day